1. Start with a well-organized datasite. 

Begin with asking your counsel to review the datasite and advise on what needs to be added and what needs to be removed before financing parties and their counsel(s) have access. Why is this important? Consider how many people will be accessing the datasite over the course of the financing—often at least 25 attorneys, plus business and legal professionals within the developer’s organization and within financing parties.  As outside counsel, we spend an inordinate amount of time searching on the datasite for necessary items and checking the datasite to see if our client has posted something that was requested. We often point other counsel to specific folders in the datasite to save them time, and if the datasite is in order from the start, those attorney-to-attorney communications can be reduced.

Organization is not difficult, but avoid using “miscellaneous” and “other” categories as much as you can. Labeling a folder “miscellaneous” or “other” means each person looking for a document in that section has to open and view that folder. Over the course of several months working on a financing, that time adds up.  Assuming your attorneys bill by the hour, that makes a difference.

Organizing the datasite also gives a favorable impression to investors, buyers, and financing parties.  It shows that your business is well-run and that your in-house teams have the requisite knowledge and attention-to-detail to build a complex project.

2. Use a nationally known renewable energy title company. 

Development counsel can make recommendations for knowledgeable and reasonable title insurance companies who regularly work on utility scale projects. Here are some things an experienced title company can do easily that less knowledgeable title companies may struggle with:

• Provide all appropriate minerals coverages typical for renewable energy 
• Commit to certain future coverages, within the limits of the law, for tax equity fundings for example, if certain conditions precedent are met later 
• Work quickly and expect the volume of comments and documents that will come
• Know what to expect from the closing instruction letter and the closing process itself which, unlike a commercial real estate closing, does not have a set date

In a financing, real estate counsel for the developer and all financing parties may spend a third of their time working on title insurance issues and negotiating with the title company.  To meet all the requirements efficiently, you’re better off with a national company with the ability to anticipate your needs. Additionally, national developers can negotiate rates outside of Texas, so using one company with negotiated rates is an efficient practice.

3. Hire a knowledgeable renewable energy surveyor.

Husch Blackwell has observed a number of issues using inexperienced ALTA surveyors:

• Inability to sign and seal electronically or quickly enough
• Inability or refusal to include the full and expected notes and coverages such as wind turbine FAA approvals on the survey
• Refusal to include certain certification language or to certify to all parties that require the certification
• Insufficient staff to revisit the site when needed to update the drawings quickly
• Need for repeated calls with counsel in order to understand our comments and requirements

In one case, Husch Blackwell led a weekly call with the surveyors for several months, while communicating the same concepts by email in between calls, repeatedly explaining what was needed.  The other big issue is the unknown—each time you use a surveyor who doesn’t regularly work in the industry, you don’t know what they don’t know and therefore can’t be well-prepared. 

Bear in mind that you often will use the surveyor more than once.  If there’s tax equity investment involved, the pre-construction survey is required at signing and then an as-built survey is required at funding (first or second funding for solar).  If the initial loan is a construction loan, an as-built survey may be required at term conversion.  In many cases, you will need to re-engage the surveyor for significant updates later in the project’s life cycle.

In sum, experience matters, and should save time and money.  Using experienced counsel, title and survey companies has the added bonus that they may know each other.  Many service providers in this industry have built a rapport together over the years – that background of trust and shared experience can help you close out a difficult issue more quickly than you could using inexperienced companies. 

4. Get ahead of third-party deliverables such as subordinations and lien waivers.

These third party items are administrative, but they can hold up a loan closing. Much of the work is tracking and chasing contractors and/or subcontractors, seeking signatures, making tweaks to documents. Many originals must be delivered to the title company in time for closing. Husch Blackwell often sees this work stream shift from the in-house team to outside counsel at the last minute and in ways that, at times, could be avoided. This happens to large, experienced developers as well as newer or smaller developers—the number of documents is surprisingly large, and wrangling third parties who aren’t a part of your loan closing is always difficult. 

To avoid scrambling and using attorney resources:

• Be sure all original construction contracts incorporate the correct state forms attached for lien waivers as well as subordination obligations for project loans
• Educate your construction team on local requirements for bonds and correct state forms
• File any documents that can and should be filed of record up-front
• Ensure the construction team has contact information for in-house attorneys or other executives at each contractor and any major subcontractors*
• Consider assigning a paralegal in-house, or an outside paralegal who starts early, to alert contractors to timelines, manage the process, check signatures, forward originals, and coordinate with the title company

If a lien claim is filed, other procedures and requirements will kick in, subject to state law.  You must move quickly in that case if financing is underway, as that process may rely on county recording officers—additional third parties who are not involved in your closing.  

*Thanks to a client for that suggestion.

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